Brent Hunsberger | For The Oregonian/OregonLive

About Me:

Brent Hunsberger has written The Oregonian's "It's Only Money" personal finance column since 2008. He graduated from Indiana University with bachelor's degrees in journalism and sociology.
In 2010, he passed the CERTIFIED FINANCIAL PLANNER™ Board of Standards exam. He now is a candidate for CFP® certification and works as an Investment Adviser Representative with Silver Oak Advisory Group, a fee-only financial planning firm in Portland.
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I share your concerns. However, the Multnomah County Assessor's estimate of the market value of their home was even higher. Both the Carters and I thought it was less reliable. Zillow, in this instance, was the best estimate I had, short of hiring an appraiser.

I'm not quite following your math or your reasoning. If the Carters withdraw half of their $160,000 retirement savings, they'll be penalized 10 percent because they have not yet reached 59.5 years of age. That distribution also would add $80,000 to their adjusted gross income for the year, which would threaten to push them from a 34% (federal & state combined) tax bracket to a 37% tax bracket.

So, of that $80,000, $45,000 (charitably) might be left after taxes and penalties for the Carters to use to pay down their mortgage. That would leave their mortgage balance around $165,000. And what kind of loan are you proposing they get, provided they can convince a lender to give them financing given their income situation? An interest-only loan? Are you suggesting they speculate on the housing market and pay only interest for five years? Not sure I follow.

Their housing costs indeed are too high. The move you suggest, however, will use up ALL of their retirement savings and trash their credit. Making such a drastic move without first exploring a mortgage modification, the state's mortgage assistance program or a home sale is like giving up without exploring all options available. It would not be the wisest move.

A couple readers have wondered about First Federal Savings & Loan Association of McMinnville.

In fact, the S&L entered into a "formal written agreement" in November with the U.S. Comptroller of the Currency to improve its performance. The regulator wans it to improve what it deemed to be unsafe lending and risk-management practices and ineffective management and board oversight. You can read the agreement here: http://www.occ.gov/static/enforcement-actions/ea2011-170.pdf

I failed to note the action in this story because First Federal is not a state chartered bank; it's regulated by the OCC.

The rules are complicated, no doubt. But without these rules, actually, your tax bill would be even higher. IRAs offer an incentive to save for retirement that we all need. They allow us to shield some income and investment growth from taxation until retirement. The rules I've written about here allow most inheritors to relieve their immediate tax burden and spread it out over time.

Apologies for leaving that out. I thought the column was long and complicated enough without mentioning Roths, much less rules surrounding 401(k) and other qualified plans. I knew my online readers such as yourself would be perceptive enough to raise questions I hadn't covered and that experts such as Bruce Miller and Ben Gilbert would weigh in with answers. Thanks guys!